Venezuela was once the richest country in Latin America, with the largest known oil reserves in the world. Today, the country is in shambles in the midst of a political, economic and humanitarian crisis.
Even though Venezuela was once the richest country in Latin America, it was always plagued by widespread social inequality and corruption. Hugo Chavez, Venezuela’s former president, began a movement that promised to “free the people” from this inequality and improve their lives.
Chavez was elected in 1998 and throughout most of his presidency, he used the revenue from oil sales to build new homes and medical clinics for Venezuela’s poor. These new policies made him popular with the population, but despite promises, he never seriously tried to scale back his spending or Venezuela’s dependence on oil. Instead, he fixed the prices of food staples and stopped exporting them, he nationalised private companies and never took advantage of the bonus coming from oil sales to develop a more modern and sustainable economic model.
With the high level of spending on social welfare programs, the Venezuelan government has been running a huge fiscal deficit. After Chavez’s death, Nicolas Maduro took office as his handpicked successor. In 2014, prices of oil started to fall, and consequently the government’s revenues sharply declined, meaning the Maduro administration could no longer afford its social programs.
Venezuela’s GDP is projected to fall by 18% in 2018 (it already fell by 14% in 2017 and 16.5% in 2016), and Venezuela currently has the highest inflation in the world, making food and medicine inaccessible to most Venezuelans. The International Monetary Fund has also predicted that inflation in the country will hit 1,000,000% by the end of 2018. Bolivars, the country’s currency, has become worthless, with most Venezuelans being forced to operate with dollars that are accessible on the black market, where the rate has reached 12,000 bolivars per dollar.
Crude oil comprises almost 95% of Venezuela’s export, and its dependency on oil has caused severe energy crises, so the government tried to turn to hydropower as an alternative for energy. In 2016, however, water in Venezuela’s dams reached a historic low, and to conserve electricity, the government instituted planned blackouts and a two-day work week for public employees.
To stay in power, Maduro has also rigged the economy – the military got complete control of the food supply in 2016 after he declared a state of emergency, and he set the official exchange rate at 10 bolivars per US dollar for his political allies only. Due to the worthless value of the bolivar and the fact that food is almost unaffordable for most Venezuelans, Maduro’s allies are profiting from this scheme, and therefore helping him stay in power.
In August 2018, Maduro announced a “magic formula” to fix Venezuela’s economic crisis. The formula consists of a new currency that lops five zeros off the bolivar, a sharp increase in the price of fuel and a rise in the minimum wage of more than 3000%. This, however, has been criticised for being unrealistic and ineffective in rescuing Venezuelans from their economic agony.
Since Chavez, power has been increasingly consolidated in the executive branch. The president can now, for example, suspend unfriendly judges, completely destroying the judiciary’s power to act as a check on the president.
Maduro’s government has strict censorship tactics to silence the opposition, which as a result is currently incapable of taking action against the government.
In 2016, Maduro declared a state of emergency which was backed by the Supreme Court (but not the National Assembly), giving him greater control of the country.
In 2017, the government held elections for the national constituent assembly, a new assembly that has the power to redraft the country’s constitution, in an attempt to override the existing parliament and leave no opposition to Maduro’s rule.
In the 2018 elections, there were several indicators that the government controlled the elections. Not only were the elections moved from December to May, allowing little time for the opposition to campaign, but the main opposition party was banned from running. In addition, there were accusations that food and money were promised to people who voted for Maduro.
Venezuela’s economic state has led to a shortage of drugs and other supplies used by hospitals, with the Venezuelan Pharmaceutical Federation estimating that 85% of basic medicines are unavailable or difficult to obtain. In addition, around 30% of school-aged children are predicted to be malnourished.
Besides the lack of resources, the economic state has meant violence in the country has increased, with the country’s murder rate surpassing that of the most dangerous cities in the world. In 2016, Venezuela’s homicide rate was 91.8 per 100,000 people (the American homicide rate is of 5 per 100,000 people), and in the first eleven days of 2018, there were 108 recorded episodes of looting.
People are now desperately fleeing to nearby countries, such as Colombia, Peru and Brazil. An estimated 2 million Venezuelans are projected to leave the country in 2018, adding up to a total of 4 million since 2016. Peru is receiving around 5,000 Venezuelans a day, and around 900,000 Venezuelans have moved to Colombia, a third of those this year alone.
The Organisation of American States tried to convince the Western Hemisphere to take action in Venezuela, and threatened to expel Venezuela from the organisation if it did not accept international help or implement new measures, but to preempt such political embarrassment, Venezuela withdrew voluntarily.
Mercosur, an economic and political bloc comprising of Argentina, Brazil, Paraguay, Uruguay and Venezuela, suspended Venezuela in late 2016, citing the government’s violation of human rights.
The United States has introduced sanctions on Maduro, regime officials and on Venezuela’s new currency, but none of these seemed to have so far produced any notable impact on Maduro’s regime.
Venezuela’s problems only continue to worsen, and there seems to be no easy way out. In the beginning of August, Maduro, while speaking at a military event in Caracas, was the target of an assassination attempt involving explosive drones. This comes at a time when his government is receiving increasing criticism and backlash from within.
There is still, however, a loyal core of people who support him and his party (United Socialist Party), who believe Venezuela’s problems are caused by ‘imperialist’ powers like the US waging economic wars on Venezuela.
Written by Camila Bonchristiano, September 2018